Cummins' profit drop less steep than Wall Street forecast
(Reuters) - Cummins Inc (CMI.N) posted a 30.5 percent drop in profit that was less steep than Wall Street had feared and warned that sales could fall as much as 5 percent this year as it copes with falling demand for its heavy truck engines.
The U.S. manufacturer did not provide a 2013 per-share profit target, but said on Wednesday it expects its earnings before interest and taxes to amount to 13 percent to 14 percent of sales, compared with 13.7 percent in the year just ended. Sales could be flat to down 5 percent, it said.
Its shares rose 3.5 percent in early trading, with analysts reckoning that after having to lower its guidance twice in 2012, Cummins had reason to be guarded.
"We believe this forecast is likely a prudent starting point that Cummins can execute on should conditions remain difficult and post potential upside should particular end markets rebound earlier than anticipated," said David Leiker, an analyst with R.W. Baird & Co.
The Columbus, Indiana-based company reported a fourth-quarter profit of $381 million, or $2.02 per share, compared with $548 million, or $2.86 per share a year earlier.
Factoring out restructuring charges and a tax benefit, profit was $2.00 per share, above the $1.75 per share that analysts on average had expected, according to Thomson Reuters I/B/E/S.
Revenue fell 12.8 percent to $4.29 billion, which was also above forecasts.
"Demand declined across most geographies and end markets in the second half of 2012 as the global economy slowed," Chief Executive Tom Linebarger said.
Cummins' shares gained $4.10 to $121.49 on the New York Stock Exchange.
As of Tuesday's close, Cummins' shares were down 2 percent over the past 52 weeks - a time that saw the broad Standard & Poor's 500 index .SPX rise 12 percent.
Cummins has not been alone in coping with weak demand for trucks. Late last year truck maker Navistar International Corp (NAV.N), in the midst of a major restructuring, reported a quarterly loss.
(Reporting By Scott Malone; Editing by Gerald E. McCormick and Maureen Bavdek)
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